When I first started selling real estate in 1978, the contract to purchase a home a home was only one page long. Now in 2019, the contract to purchase a home has grown to 14 pages, plus multiple pages of disclosures, approaching 30 pages total. I have watched the contract grow, a few clauses at a time, over the last 40 years. In the past, contracts were updated as often as once a year. Now, they are usually updated every two years, unless there is a Federal or Colorado legislative mandatory update. This year is one of the mandatory legislative update years.
On March 6, 2019, the Colorado Association of REALTORS® (CAR) announced that Governor Jared Polis signed House Bill-19-1098, known as the “Deeds to Convey Real Property Bill” into law. Several members and representatives of CAR, including CAR Chair Justin Knoll and CAR General Legal Counsel Scott Petersen, were on hand for the signing. There were many industry stakeholders such as title companies, attorneys, and lenders involved in developing this bill. CAR worked with them to develop the bill for the benefit of all.
According to the announcement from CAR, the common-sense solutions in the legislation will:
- Reduce confusion and lessen disputes arising from the current contract form to transfer real property
- Ensure a clear public record of the real estate transaction
What the Bill does:
- Authorizes a title company to prepare a deed using one of the forms of statutory deed established by this legislation
- Fairly and reasonably balances the risks between the seller, buyer, and title company
The good news is that the legislation only requires a change to Section 13 of the Colorado Standard Contract to Buy and Sell Real Estate. Section 13 is known as the Transfer of Title Section. This is as a result of the passing of House Bill-19-1098 by the Colorado Legislature, which passed unanimously. The new statute says that if title transfers via General Warranty deed, title will be transferred “subject to statutory exceptions,” which are defined in the Colorado Revised Statutes 38-30-113(5)(a). The passage of this bill means the contracts will change and will be mandatory on July 1, 2019.
In the past, the default deed in the section was a General Warranty deed. Now, the default deed is a Special Warranty Deed. There are check boxes for the other types of deeds that might be used. Home buyers and sellers can discuss this further with their attorney, REALTOR®, and title company if there is a reason to use a deed other than the default Special Warranty deed.
In addition, House Bill 19-1098 clears up a longstanding problem concerning the authority to draft deeds conveying real property in a transaction. Previously, a licensed real estate broker could prepare a deed, but the broker could delegate the limited authority to the title company as the broker’s scrivener. This legislation gives the title company the authority to prepare the deeds, without being the broker’s scrivener.
The key point to remember is that in less than a month, on July 1, 2019, the new contracts will be mandatory for licensed agents to use.